The U.S. launched a fresh wave of strikes on Iranian Revolutionary Guard Corps targets on Tuesday, pushing Brent crude up 4.4% and Treasury yields to session highs. Iran threatened to hit back, raising the risk of a full-blown return to war six months after fighting first broke out.
Strikes send oil and yields higher
American forces began striking Islamic Revolutionary Guard Corps targets on Tuesday, U.S. Central Command said, in retaliation for Tehran's targeting of American troops and commercial ships in the Strait of Hormuz. It was the second round of U.S. strikes in three days after a month of relative calm in a war that had already sent global energy prices soaring.
Brent crude rose 4.4% to $94.45 a barrel, while U.S. marker West Texas Intermediate climbed 5% to $90.11. The U.S. 10-year Treasury yield rose 0.05 percentage points to 4.79%, its highest level since early 2025, as investors worried higher oil prices would worsen inflation. Japanese 10-year yields had earlier hit their highest level since 1996, while U.K. gilt yields reached their highest point since 2008.
President Donald Trump said on his Truth Social platform that the strikes were retaliation for Iran's failed attempt to add sea mines to the Strait of Hormuz and its missile attack on a U.S. base in Jordan. According to Truth Social: he warned that if Tehran retaliates, Iran would be hit "at a much harder and higher level".
Iran vows retaliation
Iran's General Staff of the Armed Forces threatened to impose a heavy cost on the American enemy and deliver crushing, debilitating blows. Tasnim News Agency, which is close to the IRGC, reported that Iran's armed forces launched a decisive operation in response to the U.S. strikes and said U.S. bases and interests in the region would be targeted.
The escalation follows attacks on two oil tankers, one South Korean and one Saudi Arabian, that were shuttling crude out of the Gulf on Monday night. On Sunday, U.S. forces struck rocket launchers on Iran's Larak Island after CENTCOM said Iranian forces were preparing to fire rockets carrying sea mines into the strait. Tehran responded by launching missiles at U.S. sites in Jordan that were intercepted.
A war Trump once said would end in weeks
The conflict threatens to extend a war Trump once predicted would be over in four weeks, complicating his pledge to end wars ahead of November's midterm election. Trump's approval sits at 33%, while just 36% of Americans approve of the Iran war, according to a Reuters/Ipsos poll released Monday.
The U.S. Embassy in Qatar issued a security alert Tuesday warning of the potential for unforeseen escalation and urging Americans in the region to exercise heightened vigilance amid possible flight cancellations and airspace closures. Roughly a fifth of global oil supplies passed through the Strait of Hormuz before the war, according to the U.S. Energy Information Administration.
Trump reimposed a naval blockade on Iranian ports after a June memorandum of understanding he had signed with Tehran collapsed. Iranian leaders say the only way to end the conflict is to return to the terms of that agreement, but the U.S. has told mediators it will not revive the deal as it seeks to use economic pressure to force Iran to meet its demands.
Sources: Financial Times, CNBC
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